RIL net fails to sparkle despite oil price rise

INDIA’S largest private sector company Reliance Industries’ (RIL) June 2008 quarter results were nothing to cheer about. The company posted a 13% growth in net profit to Rs 4,110 crore on revenues of Rs 41,579 crore, up 41%. The operating profit margin took a hit, as both its major segments — petroleum refining and petrochemicals — registered a fall in margins. The company apparently did not book any inventory gains during the quarter despite a nearly 30% jump in crude oil prices during the quarter. Oil and gas, mainly from the Panna-Mukta fields, was the only segment which performed well. The performance of RIL’s refining business did not benefit from the rising prices of crude oil and petroleum products. Gross refining margins (GRMs) were almost flat during the quarter at $15.7 per barrel compared to $15.4 in June 2007. While revenues from the refining business jumped 46% during the quarter, profits from the segment rose just 19%, indicating an erosion of margins. The refinery operated at a 98.5% capacity utilisation level, with the crude throughput rising 1.5% to 8.13 million tonne. As expected, RIL’s petrochemicals business witnessed a fall in profit, thanks to higher naphtha prices, which spurted nearly 40% during the quarter to $1,230 per tonne. The segment profit fell 14% despite a 13% increase in sales revenues. The ratio of PBIT-to-netsales fell 340 bps to 10.6% while the volume increased 4% to five million tonne. As global energy prices shot up, RIL’s revenues and profits from the oil and gas segment, too, rose. This was the only segment, which witnessed a gain in profit margins, going up to 63.9% from 56% in the corresponding quarter of the previous year. Low-tariff play helps Bharti Airtel
THE game of reducing tariffs seems to have worked in favour of Bharti Airtel, the largest mobile operator in the country. Though it reported a 2% drop in average revenue per user (ARPU) during the June 2008 quarter, the higher minutes of usage more than compensated this fall. This helped Bharti maintain its growth momentum in topline, which was well above the expectation.
Despite impressive numbers, Bharti’s scrip witnessed a selling pressure in a weak market on Thursday. On BSE, the stock declined 2.2% compared to a 1.1% fall in the Sensex.